Freddie Mac Student Housing Multifamily Loans

Since 2010, Freddie Mac has originated almost $10 billion through their multifamily student housing loan program. As a leader in the student housing finance sector, they offer extensive experience with this product type and can customize loans to fit every investor’s needs. Their experience with student housing multifamily loans enables Freddie Mac to understand not only student housing’s specific attributes but also the landscape of each market around each American university. Freddie Mac Student Housing Multifamily Loans provide incredibly flexible terms of between 5 and 10 years on loan amounts between $5 and $100 million. They can even lend up to 30 years for non-securitized, fixed-rate loans. Additionally, this program will finance up to 80% LTV and the loans are fully non-recourse. Interest-only student housing loans are available. Finally, Freddie Mac will finance all dedicated student property types including garden, cottage, mid-rise and high-rise properties.

Freddie Mac Student Housing Multifamily Loan Highlights

Loan Amount: $5 million- $100 million

Purpose: Purchase or refinance

Term: 5-10 years (up to 30 years for fixed-rate loans if loan is not purchased for securitization)

Amortization: Up to 30 years

Interest Only: Partial and full term available

Maximum LTV:

5 Year Loan

• Amortizing: 75% LTV
• Partial Term Interest-Only: 75% LTV
• Full Term Interest-Only: 65% LTV

7 Year Loan

• Amortizing: 80% LTV
• Partial Term Interest-Only: 80% LTV
• Full Term Interest-Only: 70% LTV

10 Year Loan

• Amortizing: 80% LTV
• Partial Term Interest-Only: 80% LTV
• Full Term Interest-Only: 70% LTV

Minimum DSCR:

5 Year Loan

• Amortizing: 1.35% DSCR
• Partial Term Interest-Only: 1.35% DSCR
• Full Term Interest-Only: 1.45% DSCR

7 Year Loan

• Amortizing: 1.30% DSCR
• Partial Term Interest-Only: 1.30% DSCR
• Full Term Interest-Only: 1.40% DSCR

10 Year Loan

• Amortizing: 1.30% DSCR
• Partial Term Interest-Only: 1.30% DSCR
• Full Term Interest-Only: 1.40% DSCR

Eligible Borrowers:

• Borrowing entity can be any of the following: limited partnership, corporation, limited liability company, or a tenancy in common (TIC) with 10 or fewer tenants in common
• Other structures such as general partnerships, limited liability partnerships, REITs and certain trusts may also be acceptable in limited circumstances.
• Borrower must usually be a Single Purpose Entity. However, on loans less than $5 million, a borrower other than a TIC may be a Single Asset Entity instead of a SPE
• If the borrower is structured as a TIC, each tenant in common must be an SPE

Eligible Property Types

• Student housing properties must have a minimum of one bathroom for every two bedrooms.
• Each apartment must have its own full kitchen.
• Stabilized garden, mid-rise and high-rise multifamily properties that are more than 50% occupied by students.
• Supporting college/university must have 8,000 or more students.
• Student housing properties located within close proximity to multiple schools that have a combined student body of 8,000 students or more will be considered
• Property must be either located less than two miles from college/university or situated on a public transportation route.

Prepayment Penalty: Prepayment Penalties: Yield maintenance until securitized followed by 2-year lock out; defeasance thereafter. No prepayment premium for final 90 days. If loan is not securitized within first year, then yield maintenance applies until the final 90 days. Yield maintenance without defeasance is available for securitized loans at an additional cost.

Other Considerations:

• Ground lease for land owned by a college or university may be permitted with prior approval
• 12-month lease is preferred, although a shorter lease of at least nine months will be considered
• Parental lease guaranty is preferred by Freddie Mac
• Residence halls or other multiple occupancy rooms with a shared common bathroom and centralized dining halls are excluded
• Tax and Insurance escrow are generally required
• Replacement Reserve deposit required. Generally a minimum of $150 per bedroom or $300 per apartment
• Supplemental Loans are available subject to requirements and guidelines in the Freddie Mac loan agreement